Every year, tax legislation in Romania brings changes that directly influence the way companies manage their profits. One key area for partners is dividend tax. This article explains what this tax entails, how the legislation has evolved and what associates need to know about the new changes applicable from 2025.

What is dividend tax?

Dividend tax is the amount due to the state for the distribution of a company’s net profit to its shareholders or associates. In essence, it is a tax levied on the amount distributed after the firm has met its corporate or microenterprise tax obligations.

In Romania, dividends can be distributed either on the basis of annual or interim financial statements. However, this decision comes with important tax obligations for the company and the shareholders.

Dividend tax law changes

Starting in 2025, some important changes have been announced that affect the way dividend tax is managed:

1. Dividend tax rate rises to 10%:

o As of January 1, 2025, the tax rate applicable to distributed dividends is 10%, up from 8% previously. This applies to all dividends distributed after this date, regardless of the year in which the profit was realized.

2. The obligation to pay the social health insurance contribution (CASS):

o Associations that receive dividends exceeding the ceiling of 24 gross minimum wages (in 2025, the ceiling is 86,400 lei) are obliged to pay CASS.

o CASS is calculated at that ceiling, regardless of the amount of the excess.

3. Dividends distributed but not actually paid:

o If dividends are distributed, but not actually withdrawn by the shareholders, they are considered as paid for tax purposes and are subject to taxation. This measure is aimed at preventing tax avoidance.

4. Changes to declaration and payment:

o The deadline for payment of dividend tax remains until the 25th of the month following the actual distribution of dividends.

o Taxpayers should pay particular attention to the single return (D205), which includes all amounts distributed to the partners.

How is dividend tax calculated?

The tax calculation is relatively straightforward, but it must be done correctly to avoid penalties:

1. Establishing the tax base:

o The net profit remaining after deducting the company’s expenses and taxes is the basis for calculating dividends.

2. Tax calculation:

o Tax base × 10% = Dividend tax.

3. CASS (if applicable):

o If the amount of dividends exceeds the ceiling of 24 gross minimum salaries, CASS is calculated as follows:

 Annual ceiling (24 minimum wages) × 10% = CASS due.

4. Practical example:

o Distributed profit: 120.000 lei

o Dividend tax: 120.000 × 10% = 12.000 lei

o CASS (if the ceiling is exceeded): 86.400 × 10% = 8.640 lei

What should associates do to avoid tax problems?

1. Financial planning:

o Regularly analyze your company’s financial situation and consult a chartered accountant to decide the best time to distribute dividends.

2. CASS ceiling monitoring:

o If you distribute large dividends, be sure to consider the impact of the health contribution.

3. Compliance with legal deadlines:

o Pay dividend tax by the deadline to avoid penalties.

4. Working with an accountant:

o An experienced accountant can help you understand legislative changes and optimize tax costs.

Conclusion

Dividend tax is an important tax liability for any partner in a firm. In 2025, with the increase in the rate to 10% and the obligation to pay CASS on large amounts, it is essential that firms prepare ahead of time and work with accountants to comply with the legislation.

If you need advice or support in managing your dividend and tax liabilities, our team of accountants is at your disposal!

Read about other 2025 tax changes here.